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Accidental death and dismemberment insurance provides coverage if the policyholder dies by accidental means, or loses use of limbs or eyes.

Employers frequently offer AD&D policies in the form of a rider attached to a group health plan. The policy usually requires the insurer to pay double what the beneficiary would receive under a regular life or health insurance policy. These policies are sometimes called double indemnity riders.

Some financial advisors say AD&D is a bad investment, since the circumstances under which a beneficiary is paid hardly ever occur. Also, the policy’s fine print details many conditions that negate benefits. For example, if a policyholder is injured in an accident, but dies some time later, benefits may not be paid if the death didn’t occur by a certain date.

AD&D usually has low premiums, and can be a wise purchase for younger people. But its limitations should be considered, and it’s not a good replacement for term insurance.

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